Name: _________________________________________ Date: _________________ Block: ________
Civics & Economics: Financial Institutions (CE.12c) &
Impact of Taxation (CE.13c)
● Essential Understandings:
○ Private financial institutions act as intermediaries between savers and borrowers
that include households and business investors.
○ The government taxes, borrows, and spends to influence economic activity.
● Essential Questions:
○ How do financial institutions make the deposits of savers available to borrowers?
○ How does the government influence economic activity?
● Essential Knowledge:
○ Private financial institutions
■ Include banks, savings and loans, and credit unions
■ Receive deposits and make loans
■ Encourage saving and investing by paying interest on deposits
○ Government tax increases reduce the funds available for individual and business
spending.
○ Increased government borrowing reduces funds available for borrowing by
individuals and businesses; decreased government borrowing increases funds
available for borrowing by individuals and businesses.
○ Increased government spending increases demand, which may increase
employment and production; decreased government spending reduces demand,
which may result in a slowing of the economy.
○ Increased government spending may result in high taxes; decreased government
spending may results in lower taxes.
○ The 16th Amendment to the Constitution of the United States of America
authorizes Congress to tax personal and business incomes.